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What is poverty?
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What is poverty?
Poverty is a situation where a person lacks the financial resources to sustain a basic standard of living.
Define the term absolute poverty.
Absolute poverty is a situation where individuals cannot afford to acquire the basic necessities for a healthy and safe existence.
True or False?
Absolute poverty is more prevalent in developed countries than in developing ones.
False.
Absolute poverty is more prevalent in developing countries than developed ones.
What does relative poverty mean?
Relative poverty is a situation where household income is a certain percentage less than the median household income in the economy.
True or False?
Low wages are the major cause of poverty.
True.
Low wages are the major cause of poverty.
How does a lack of human capital contribute to poverty?
A lack of human capital results in lower productivity, a shorter life expectancy, and lower wages, contributing to the poverty cycle.
What is the poverty cycle?
The poverty cycle explains the causes of poverty, including low wages, a lack of human development, land ow productivity.
True or False?
A large number of dependents per working household leads to higher poverty levels.
True.
Populations with a large number of dependents (old people and children) for each working household tend to experience higher levels of poverty.
Define the term dependency ratio.
The dependency ratio is the ratio of dependents (old people and children) to working population in a household or economy.
What does a high dependency ratio indicate?
A high dependency ratio indicates a larger non-working population, which can contribute to higher poverty levels.
How can promoting economic growth alleviate poverty?
Promoting economic growth can lead to higher wages.
Higher growth → higher wages → better education/healthcare → better human capital → better productivity → higher income
What is the impact of improving education on poverty?
Improving education increases human capital, which can lead to increased productivity, higher output, and higher income, alleviating poverty.
Define the term state benefits.
State benefits are sums of money given by the government to the poorest and most vulnerable people in society.
They include unemployment benefits, disability payments, pension payments, heating discounts and public transport subsidies.
How do more generous state benefits alleviate poverty?
More generous state benefits can provide higher income, allowing for better education and healthcare, which alleviates poverty.
What is the purpose of progressive taxation?
Progressive taxation is a tax system that redistributes income from those with higher income to those with lower income, reducing income inequality.
True or False?
Progressive taxation always leads to better education and healthcare.
False.
The benefits of a good progressive tax system are reduced by the penalties imposed through regressive (indirect) taxes.
Which policy aims to set wages above the free market rate?
The establishment of a national minimum wage aims to set wages above the free market rate.
How does a national minimum wage alleviate poverty?
A higher minimum wage can lead to better education, healthcare, human capital, productivity, and higher wages, alleviating poverty.
True or False?
Higher wages → better education/healthcare → better human capital → lower productivity → higher wages
False.
Higher wages → better education/healthcare → better human capital → better productivity → higher wages
True or False?
Policies that improve any factor in the poverty cycle diagram will help to alleviate poverty.
True.
Policies that help to improve any factor in the poverty cycle diagram will help to alleviate poverty.